The Stock Exchange of Thailand index jumped more than 1% on Wednesday after the Bank of Thailand increased its policy rate, while other Southeast Asian stock markets ended mostly higher, as reports of a potential US-China meeting in January boosted sentiment.
Investors took heart after US Treasury Secretary Steven Mnuchin told Bloomberg in an interview that the United States and China are planning to hold meetings in January to "document an agreement" on trade.
The dispute between the world's two biggest economies threatens businesses throughout the region due to global value chains.
"Positive signals on the trade war front are stabilising risk in Asia," Stephen Innes, head of trading for Asia-Pacific at OANDA, said in a note.
The SET index reversed course during early trade to edge higher, as gains in financial and industrial stocks offset losses in energy companies.
The index gained 17.93 points or 1.13%, in turnover of 45 billion baht.
The Monetary Policy Committee voted 5-2 to lift its one-day repurchase rate by a quarter-point to 1.75% after keeping the rate unchanged since April 2015.
However, caution prevailed ahead of the highly anticipated US Federal Reserve meeting scheduled later on Wednesday amid expectations that their hawkish stance may give way to a "dovish" hike.
Philippine shares, the top performers in the region, closed at their highest level in two weeks.
Industrial and financial stocks were the biggest boost in the index, with DMCI Holdings Inc ending 6.8% higher, while Aboitiz Equity Ventures Inc closed up 5.5%.
Singapore stocks ended firmer on the back of financial stocks, while Indonesian shares snapped three straight sessions of declines to close higher.
Top performers computer and electronics retailer Global Teleshop Tbk closed 25% firmer, while Bank Agris Tbk ended 24.5% higher.
Malaysian stocks ended 1.2% higher, after plumbing near two-year lows in the previous session.
Bucking the trend, Vietnamese stocks slipped 0.9% to notch their fifth straight session in the red, with financial stocks being the biggest drag.
The slump was due to a technical sell-down, owing to the recent strength that had pushed the index to a level above 960 points, said Bui Nguyen Khoa, head of macro research, BIDV Securities Company.
Macro-economic factors and local business remained sound in the country, he said, adding that global downtrend in equities could apply some psychological pressure, pushing the index to about 880 points-900 points where it would stabilise again.
Shares in Vietnam Joint Stock Commercial Bank for Industry and Trade closed 4.9% lower, while Joint Stock Commercial Bank for Foreign Trade of Vietnam lost about 1.3%.